I’ve lost clients to realtors who told them their house was worth more than I thought they could get for it, then watched as their listings became stale-dated. After a series of price drops, those homes have usually sold, but with frustrated owners.
In one instance, a friend of mine who had referred the prospective seller to me contacted me after the sellers finally sold. It was months and months after they’d listed their property; he said they realized they’d made a mistake by going with the agent who told them what they wanted to hear.
I often tell my clients that pricing a home isn’t an exact science. Even so, they are always wise to err by under-pricing their home rather than over-pricing it. I know, that seems counter-intuitive. “But we’d be leaving money on the table,” they protest. “We don’t want to give it away.”
I understand those concerns, but here’s how the things work:
The market rushes towards perceived value.
If your home is under-priced relative to what the market (meaning, buyers and their agents) think it is actually worth, you will get lots of activity and likely get multiple offers. Multiple offers have the effect of driving the asking price up or over market value: all experienced agents tell their buyers to go in with their best offer upfront, as there may not be a second chance.
There are ways your realtor can control the offer situation to make sure they’ve scouted all possible interest, so that whatever offer you get is the best it can be. They can hold off on offers until a certain date and time: if that time comes and goes, though, and you still don’t get an offer, your property wasn’t over-priced in the first place.
Because here’s another reality:
If you don’t get a single offer within the first week of your home being listed at a price you thought was too low, it wasn’t too low in the first place.
With the over-priced home, you only have two options. You can sit and wait it out and hope there’s a dupe willing to pay more than it’s worth who has an incompetent agent who won’t look at comparables. Since that likely won’t happen, eventually you’ll have to drop the price.
Meanwhile, you’ve helped sell the other more reasonably priced homes in the neighbourhood. And while your home has been over-priced, deterring the buyer who might have been willing to pay it at a more reasonable price, you’ve had to be on call for showings with all the the aggravation of keeping the home in immaculate condition and getting out of the way when buyers come over to see it.
Which position would you rather be in?